Why are contemporary individuals so much more ‘productive’ than those of say 200 years ago?
Indeed, as Gar Alperovitz and Lew Daly write: “Recent estimates suggest that national output per capita has increased more than twenty fold since 1800. Output per hour worked has increased an estimated fifteenfold since 1870 alone.”
The reason is not that we work ‘harder’, nor that we are all that much smarter, but rather than we can rely on an enormous amount of extra knowledge which is embedded in our technical systems:
All of this knowledge — the overwhelming source of all modern wealth — comes to us today through no effort of our own. It is the generous and unearned gift of the past.
This makes high achievement at least as much the result of this common heritage, as of pure individual merit.
This is confirmed by research on the issue:
“The central phenomenon of the modern age,” economic historian Joel Mokyr observes, is quite simply “that as an aggregate we know more.”
A half century ago, in 1957, the future Nobel Prize-winning economist Robert Solow calculated that nearly 90 percent of productivity growth in the first half of the twentieth century (from 1909 to 1949) could only be attributed to “technical change in the broadest sense.”
The supply of labor and capital — what workers and employers contribute — appeared almost incidental to this massive technological “residual.” Subsequent research inspired by Solow has continued to put a spotlight on “advances in knowledge” as the main source of growth. Another highly respected economist, William Baumol, argues that “nearly 90 percent … of current GDP was contributed by innovation carried out since 1870.” Baumol judges that his estimate, in fact, understates the cumulative influence of past advances: even “the steam engine, the railroad, and many other inventions of an earlier era still add to today’s GDP.”
So the key question becomes:
“If America’s vast wealth is mainly a gift of our common past, how, specifically, can such disparities be justified?”
The author are referring to the enormous growth in the gap in earnings and capital assets which has manifested itself in the last 30 years.
The important answers to these questions are explored in the authors’ new book, which is excerpted here in On The Commons.
The book title is: Unjust Deserts: How the Rich Are Taking Our Common Inheritance and Why We Should Take It Back